Market Timing – confirmed or not makes a big difference

It’s been a challenging market this year, and making trading decisions has never been easy. Which direction the market is likely to move plays a huge part in stock trading decisions.

The Expert Rating system on the market with its combination of 400 rules on the Dow 30 index and the NYSE internals has always provided us an early indication of direction changes.

No system is infallible, and when the Expert System on the market was created, we noticed that ratings of 95 or higher to the upside or downside (maximum rating is 100 btw) were significant. We also noticed a marked improvement in the ratings accuracy if we used a confirmation technique with a a momentum indicator.

After much research we discovered that the Phase Indicator (a version of an MACD histogram) was the most accurate tool to confirm high ratings.

Here’s how we use Phase to confirm a high Expert Rating.

When a rating of 95 up or 95 down is triggered on the market, we look for the Phase histogram to change direction. The change in direction must be to the direction of the rating. This change does not have to happen on the day of the rating, but it must occur within 2 to 3 days either side of the rating day.

If the Phase does not change direction, the rating is considered not confirmed.

This short video analysis of the last 4 ratings shows this process in action.